Abstract

The paper provides a qualitative and in-depth discussion of corporate governance in Brazil. It is divided into five sections - historical perspective and corporate governance landmarks, main recommendations of the two Brazilian codes of best practices, Bovespa’s Novo Mercado, current level of compliance of Brazilian firms with main local and international recommendations, and issues and challenges facing corporate governance in Brazil. Based on empirical evidence from recent researches, three qualitative conclusions are drawn. Firstly, Brazilian codes of best practices have been useful in educating corporate players on ‘good governance practices’. However, a few companies already adopt most part of these recommendations, and a even smaller number of companies publicly disclose their level of compliance with any code. Secondly, given the totally voluntary nature of compliance with such codes (not even a ‘comply or explain’ approach is required), the evaluation of the corporate governance quality of local firms is still a challenge to outsiders. Finally, given both the outstanding performance of local stock markets and the Initial Public Offering (IPO) boom from 2004 to 2007, the market did not really test the quality of corporate governance practices of the listed companies, including the practices of companies listed at Novo Mercado, the most demanding listing category. This should happen in the coming years.